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Boardroom doubts over Coke purchase

BOARD members at Coca-Cola have voiced opposition to the acquisition of China's Huiyuan Juice Group, state media reported yesterday, citing the Chinese company's chairman.

"The global financial crisis has placed quite a lot of pressure on Coca-Cola," the People's Daily said, quoting Zhu Xinli, chairman of the nation's No. 1 pure juice maker.

Zhu said there were growing objections to the deal among Coke's board members and he was to meet its executives next week.

Coca-Cola in September announced an offer of US$2.4 billion to buy Huiyuan, and it was expected to be its first acquisition deal in China and the largest in China's food and beverage industry.

A Reuters report said Coca-Cola's interest in Huiyuan had not been shaken despite the objections, also citing Zhu.

"At the moment we are focused on the regulatory approval process," Brenda Lee, vice president of Coca-Cola (China) Beverages Ltd, said yesterday.

Coca-Cola has been striving to boost its non-carbonated drink sales against rival PepsiCo in China while analysts said the deal may also help the company gain more advantages on raw materials sourcing.

"It is possible for Coke to withdraw the deal if it faces liquidity pressure," said Li Tie, an analyst from Essence Securities Co.

"But at this moment, Huiyuan is more important because it would help Coke to localize operations and gain competitiveness in China, one of its strategic markets."

Huiyuan is China's leading maker of pure fruit juices with 31 production facilities nationwide.

Coca-Cola reported fourth-quarter profit down 18 percent to US$995 million last year worldwide due to a stronger dollar and several writedowns. But it sold more products around the world.

The seller of Sprite, Fanta, Minute Maid orange juice and Nestea also plans to rein in spending and said it will save US$500 million a year by 2011.

Coca-Cola had 15 percent of China's packaged-beverage market in 2007, compared with Pepsi's 6 percent, according to the research firm Euromonitor.


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